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Exhibit 99.1

 

GRAPHIC

 

RealD Inc. Reports Financial Results for Third Quarter of Fiscal 2013

 

LOS ANGELES (February 6, 2013) - RealD Inc. (NYSE: RLD), a leading global licensor of 3D technologies, today announced financial results for its third quarter of fiscal 2013 ended December 31, 2012.

 

“2D films generated an outsized share of global box office receipts during our third fiscal quarter, which limited our financial results for the quarter,” said Michael V. Lewis, Chairman and Chief Executive Officer of RealD.  “Importantly, our continuing focus on growth initiatives in international markets recently led to two major exhibitor contracts in Russia, one of the highest grossing countries for 3D box office receipts.  We announced today that Russian exhibitors Karo Film and Kinomax will equip up to a combined 300 RealD systems across their circuits, providing the industry’s brightest 3D presentation to their moviegoing customers.”

 

“Our repurchase of 2.3 million shares of common stock during the quarter and the recent expansion of our stock repurchase program underscore our confidence in RealD’s future growth opportunities,” Lewis added.

 

Third Quarter Fiscal 2013 Financial Highlights

 

Financial results for the third quarter of fiscal 2013 benefited from RealD’s previously announced change in quarterly reporting periods, which added 10 extra days to the quarter ended December 31, 2012 when compared to the third quarter of fiscal 2012 ended December 23, 2011.

 

·                  Total revenue was $46.9 million, comprised of license revenue of $30.3 million and product and other revenue of $16.6 million.   For the third quarter of fiscal 2012, total revenue was $49.0 million, comprised of license revenue of $28.5 million and product and other revenue of $20.6 million.

·                  GAAP net loss attributable to common stockholders was $4.2 million, or $0.08 per share, compared to GAAP net income attributable to common stockholders of $2.8 million, or $0.05 per diluted share, for the third quarter of fiscal 2012.  The third quarter of fiscal 2012 included a tax benefit of $2.2 million.

·                  Adjusted EBITDA was $12.5 million, compared to $16.2 million in the third quarter of fiscal 2012.

·                  Adjusted EBITDA is defined within the section of this press release entitled “Use of Non-GAAP Financial Measures,” which includes a reconciliation to its most comparable GAAP measure, net income (loss).

 

Nine-Month Fiscal 2013 Financial Highlights

 

·                  Total revenue was $170.1 million, comprised of license revenue of $106.5 million and product and other revenue of $63.6 million.  For the nine months ended December 23, 2011, total revenue was $196.6 million, comprised of license revenue of $116.1 million and product and other revenue of $80.4 million.

·                  GAAP net loss attributable to common stockholders was $5.4 million, or $0.10 per share, compared to GAAP net income of $31.3 million, or $0.55 per diluted share, for the nine months ended December 23, 2011.

·                  Adjusted EBITDA was $49.4 million, compared to $86.6 million for the nine months ended December 23, 2011.

 

Cash Flows, Stock Repurchases and Balance Sheet Highlights

 

·                  For the nine months ended December 31, 2012, cash flows from operating activities were $63.0

 



 

million and total capital expenditures were $24.4 million, resulting in free cash flow of $38.5 million.

·                  Free cash flow is defined within the section of this press release entitled “Use of Non-GAAP Financial Measures,” which includes a reconciliation to its most comparable GAAP measure, net cash provided by operating activities.

·                  During the quarter, the Company repurchased approximately 2,262,000 shares of common stock for $21.5 million, representing an average cost of $9.52 per share.

·                  Since the inception of the stock repurchase program in April 2012 through December 31, 2012, the Company has repurchased approximately 4,822,000 shares of common stock.  As of December 31, 2012, $27.2 million remained available under the $75 million stock repurchase authorization.

·                  Cash and cash equivalents were $27.7 million and total debt was $35.0 million as of December 31, 2012.  The increase of $22.5 million in total debt from September 21, 2012 primarily funded stock repurchases during the quarter.

 

Key Metrics

 

·                  Estimated box office generated on RealD-enabled screens(1) for the third quarter of fiscal 2013 was $643 million ($299 million domestic, $344 million international).   In the third quarter of fiscal 2012, estimated box office generated on RealD-enabled screens was $532 million ($256 million domestic, $276 million international).

·                  The percentage of RealD box office generated from animation and family genre films (which have lower average ticket prices) decreased compared to the third quarter of fiscal 2012, when animation and family films dominated the holiday film slate.

·                  Nine 3D films were released in the third quarter of fiscal 2013 compared to eight 3D films in the third quarter of fiscal 2012.

·                  International markets generated 59% of license revenue and 34% of product and other revenue in the third quarter of fiscal 2013.

·                  As of December 31, 2012, the Company had deployed approximately 22,200 RealD-enabled screens, an increase of 13% from approximately 19,700 screens as of December 23, 2011, and an increase of 700 screens (300 domestic, 400 international), or 3%, from approximately 21,500 screens as of September 21, 2012.

·                  As of December 31, 2012, the Company had approximately 12,600 domestic screens at approximately 2,800 domestic theater locations and approximately 9,600 international screens at approximately 2,700 international theater locations.

 


(1)         Estimated domestic box office on RealD-enabled screens represents the estimated 3D box office generated on RealD-enabled domestic screens. Estimated international box office on RealD-enabled international screens is the estimated 3D box office generated on RealD-enabled international screens.  RealD’s estimates of box office on RealD-enabled screens rely on box office tracking data.  International box office reflects RealD’s estimates of international box office generated on RealD-enabled screens in 20 foreign countries where box office tracking is available.  RealD estimates these countries represent approximately 85% of RealD’s international license revenues.

 

Planned Changes to Definition of Adjusted EBITDA, a Non-GAAP Measure

 

Beginning in the first quarter of fiscal 2014 that ends on June 30, 2013, RealD intends to modify its definition of Adjusted EBITDA for financial reporting purposes to align with the Adjusted EBITDA definition under the expanded credit facility entered into on April 19, 2012. The Adjusted EBITDA definition under RealD’s credit facility does not add back sales and use tax and property tax as part of the calculation.  Beginning in fiscal 2014, RealD will no longer add back sales and use tax and property tax to calculate Adjusted EBITDA for financial reporting purposes.

 



 

3D Theatrical Release Schedule for Fourth Quarter of Fiscal 2013 and First Three Quarters of Fiscal 2014

(As of February 6, 2013 — Domestic)

 

Fiscal Q4 2013

 

Film

 

Domestic Release Date

(ending 3/31/13)

 

The Texas Chainsaw Massacre 3D

 

1/4/2013

 

 

Hansel and Gretel: Witch Hunters

 

1/25/2013

 

 

Escape from Planet Earth

 

2/14/2013

 

 

Jack the Giant Slayer

 

3/1/2013

 

 

Oz: The Great and Powerful

 

3/8/2013

 

 

The Croods

 

3/22/2013

 

 

GI Joe: Retaliation

 

3/28/2013

 

Fiscal Q1 2014

 

Film

 

Domestic Release Date

(ending 6/30/13)

 

Jurassic Park (re-release)

 

4/5/2013

 

 

Iron Man 3

 

5/3/2013

 

 

The Great Gatsby

 

5/10/2013

 

 

Star Trek into Darkness

 

5/17/2013

 

 

EPIC

 

5/24/2013

 

 

Man of Steel

 

6/14/2013

 

 

World War Z

 

6/21/2013

 

 

Monsters University

 

6/21/2013

 

Fiscal Q2 2014

 

Film

 

Domestic Release Date

(ending 9/30/13)

 

Despicable Me 2

 

7/3/2013

 

 

Pacific Rim

 

7/12/2013

 

 

Turbo

 

7/19/2013

 

 

The Wolverine

 

7/26/2013

 

 

The Smurfs 2

 

7/31/2013

 

 

300: Rise of an Empire

 

8/2/2013

 

 

Metallica: Through the Never

 

8/9/2013

 

 

Percy Jackson: Sea of Monsters

 

8/16/2013

 

 

One Direction Concert Movie

 

8/30/2013

 

 

Battle of the Year: The Dream Team

 

9/13/2013

 

 

Cloudy With a Chance of Meatballs 2

 

9/27/2013

 

Fiscal Q3 2014

 

Film

 

Domestic Release Date

(ending 12/31/13)

 

Sin City: A Dame to Die For

 

10/4/2013

 

 

Gravity

 

10/4/2013

 

 

The Seventh Son

 

10/18/2013

 

 

Thor: The Dark World

 

11/8/2013

 

 

Frozen

 

11/27/2013

 

 

Postman Pat: The Movie — You Know You Are the One

 

11/27/2013

 

 

The Hobbit 2: The Desolation of Smaug

 

12/13/2013

 

 

Walking With Dinosaurs

 

12/20/2013

 

 

47 Ronin

 

12/25/2013

 

Sources: Rentrak and imdb.com.

 



 

Conference Call Information

 

Members of RealD management will host a conference call to discuss the Company’s financial results for the third quarter of fiscal 2013, beginning at 4:30 pm ET (1:30 pm PT), today, February 6, 2013.  To access the call via telephone, interested parties should dial (877) 407-0789 (U.S.) or (201) 689-8562. (International) ten minutes prior to the start time and use conference ID 408060.

 

The conference call will also be broadcast live over the Internet, hosted at the Investor Relations section of the Company’s website at www.reald.com.  An archived replay of the call will be available via webcast at www.reald.com or by dialing (877) 870-5176, or (858) 384-5517 for international callers. The conference ID for the telephone replay is 408060.

 

Cautionary Note on Forward-Looking Statements

 

This press release includes forward-looking information and statements, including but not limited to: statements concerning anticipated future financial and operating performance; RealD’s ability to continue to derive substantial revenue from the licensing of RealD’s 3D technologies for use in the motion picture industry, as well as RealD’s relationships with consumer electronics manufacturers and its ability to generate substantial revenue from the licensing of RealD’s 3D technologies for use in the 3D consumer electronics market; 3D motion picture releases and conversions scheduled for the fourth quarter of fiscal 2013 ending March 31, 2013 and the first, second and third quarters of fiscal 2014 ending March 31, 2014, their commercial success and consumer preferences; our ability to increase the number of RealD-enabled screens in domestic and international markets and market share; our ability to supply our solutions to our customers on a timely basis; RealD’s relationships with its exhibitor and studio partners and the business model for 3D eyewear in North America; the progress, timing and amount of expenses associated with RealD’s research and development activities; market and industry trends, including growth in 3D content; RealD’s projected operating results; and competitive pressures in domestic and international markets. These statements are based on our management’s current expectations and beliefs, as well as a number of assumptions concerning future events. Such forward-looking statements are subject to known and unknown risks, uncertainties, assumptions and other important factors, many of which are outside management’s control that could cause actual results to differ materially from the results discussed in the forward-looking statements.  The Company’s Annual Report on Form 10-K for the twelve months ended March 23, 2012, the Company’s Quarterly Report on Form 10-Q for the second fiscal quarter ended September 21, 2012 and other documents filed with the SEC include a more detailed discussion of the risks and uncertainties that may cause actual results to differ materially from the results discussed in the forward-looking statements.

 

RealD undertakes no obligation to update publicly the information contained in this press release, or any forward-looking statements, to reflect new information, events or circumstances after the date they were made, or to reflect the occurrence of unanticipated events.

 



 

Use of Non-GAAP Financial Measures

 

To supplement RealD’s financial statements presented on a GAAP basis, RealD provides Adjusted EBITDA and free cash flow as supplemental measures of its performance.   The Company defines Adjusted EBITDA as net income (loss), plus net interest expense, income and other taxes, and depreciation and amortization, as further adjusted to eliminate the impact of share based compensation expense, exhibitor option expense and certain other items not considered by RealD management to be indicative of the company’s core operating performance.  The Company defines free cash flow as net cash provided by operating activities less total capital expenditures in a given period (e.g. purchases of cinema systems and property and equipment on a combined basis).

 

RealD presents Adjusted EBITDA in reporting its financial results to provide investors with additional tools to evaluate RealD’s operating results in a manner that focuses on what RealD’s management believes to be its ongoing business operations.  RealD presents free cash flow to provide investors a metric for our capacity to generate cash from our operating and investing activities to sustain our operating activities.  RealD’s management does not itself, nor does it suggest that investors should, consider any such Non-GAAP financial measures in isolation from, or as a substitute for, financial information prepared in accordance with GAAP.  Adjusted EBITDA and free cash flow are used by management for planning purposes, including: the preparation of internal budgets, forecasts and strategic plans; in analyzing the effectiveness of business strategies; to evaluate potential acquisitions; in making compensation decisions; and in communications with its Board of Directors concerning financial performance. Because not all companies use identical calculations, the Company’s presentation of Adjusted EBITDA and free cash flow may not be comparable to similarly titled measures of other companies.  Adjusted EBITDA is not intended to be a measure of free cash flow for management’s discretionary use, as it does not consider certain cash requirements such as tax and debt service payments.  Adjusted EBITDA also differs from the amounts calculated under the similarly titled definition in our credit agreement, which is further adjusted to reflect certain other cash and non-cash charges and is used to determine compliance with financial covenants and the Company’s ability to engage in certain activities, such as incurring additional debt and making certain restricted payments.

 

About RealD Inc.

 

RealD is a leading global licensor of 3D technologies. RealD’s extensive intellectual property portfolio is used in applications that enable a premium 3D viewing experience in the theater, the home and elsewhere. RealD licenses its RealD Cinema Systems to motion picture exhibitors that show 3D motion pictures and alternative 3D content. RealD also provides its RealD Display, active and passive eyewear, and RealD Format technologies to consumer electronics manufacturers and content producers and distributors to enable the delivery and viewing of 3D content.  RealD’s cutting-edge technologies have been used for applications such as piloting the Mars Rover.

 

RealD was founded in 2003 and has offices in Beverly Hills, California; Boulder, Colorado; London, United Kingdom; Shanghai, China; Hong Kong; Tokyo, Japan; and Moscow, Russia.  For more information, please visit our website at www.reald.com.

 

© 2013 RealD Inc.  All Rights Reserved.

 

Investor Contact:

Erik Randerson, CFA

424-702-4317

eranderson@reald.com

 

Media Contact:

Rick Heineman

310-339-9347

rheineman@reald.com

 



 

RealD Inc.

Consolidated Statements of Operations

 (In thousands, except per share amounts)

(Unaudited)

 

 

 

Three months ended

 

Nine months ended

 

 

 

December 31,

 

December 23,

 

December 31,

 

December 23,

 

 

 

2012

 

2011

 

2012

 

2011

 

 

 

 

 

 

 

 

 

 

 

Revenue:

 

 

 

 

 

 

 

 

 

License

 

$

30,334

 

$

28,454

 

$

106,499

 

$

116,146

 

Product and other

 

16,605

 

20,572

 

63,604

 

80,435

 

Total revenue

 

46,939

 

49,026

 

170,103

 

196,581

 

Cost of revenue:

 

 

 

 

 

 

 

 

 

License

 

10,523

 

9,202

 

34,819

 

30,321

 

Product and other

 

15,497

 

15,870

 

65,366

 

64,465

 

Total cost of revenue

 

26,020

 

25,072

 

100,185

 

94,786

 

Gross profit

 

20,919

 

23,954

 

69,918

 

101,795

 

Operating expenses:

 

 

 

 

 

 

 

 

 

Research and development

 

5,376

 

4,336

 

14,866

 

12,736

 

Selling and marketing

 

6,053

 

6,564

 

18,872

 

20,259

 

General and administrative

 

12,346

 

11,513

 

35,797

 

29,735

 

Total operating expenses

 

23,775

 

22,413

 

69,535

 

62,730

 

Operating income (loss)

 

(2,856

)

1,541

 

383

 

39,065

 

Interest expense, net

 

(426

)

(227

)

(1,027

)

(710

)

Other income (loss)

 

(183

)

(792

)

(557

)

157

 

Income (loss) before income taxes

 

(3,465

)

522

 

(1,201

)

38,512

 

Income tax expense (benefit)

 

694

 

(2,241

)

4,242

 

7,170

 

Net income (loss)

 

(4,159

)

2,763

 

(5,443

)

31,342

 

Net (income) loss attributable to noncontrolling interest

 

(1

)

70

 

89

 

(9

)

Net income (loss) attributable to RealD Inc. common stockholders

 

$

(4,160

)

$

2,833

 

$

(5,354

)

$

31,333

 

 

 

 

 

 

 

 

 

 

 

Earnings (loss) per common share:

 

 

 

 

 

 

 

 

 

Basic

 

$

(0.08

)

$

0.05

 

$

(0.10

)

$

0.58

 

Diluted

 

$

(0.08

)

$

0.05

 

$

(0.10

)

$

0.55

 

 

 

 

 

 

 

 

 

 

 

Shares used in computing earnings (loss) per common share:

 

 

 

 

 

 

 

 

 

Basic

 

51,062

 

54,524

 

53,157

 

54,274

 

Diluted

 

51,062

 

56,385

 

53,157

 

56,985

 

 



 

RealD Inc.

Consolidated Balance Sheets

(In thousands)

 

 

 

December 31,

 

March 23,

 

 

 

2012

 

2012

 

 

 

(unaudited)

 

 

 

Assets

 

 

 

 

 

Current assets:

 

 

 

 

 

Cash and cash equivalents

 

$

27,667

 

$

24,894

 

Accounts receivable, net

 

50,375

 

59,212

 

Inventories

 

14,105

 

40,577

 

Deferred costs — eyewear

 

351

 

932

 

Prepaid expenses and other current assets

 

5,392

 

2,630

 

Total current assets

 

97,890

 

128,245

 

Property and equipment, net

 

21,183

 

12,713

 

Cinema systems, net

 

129,954

 

141,024

 

Digital projectors, net-held for sale

 

971

 

1,078

 

Goodwill

 

10,657

 

10,657

 

Other intangibles, net

 

1,620

 

1,746

 

Deferred income taxes

 

3,049

 

3,049

 

Other assets

 

5,101

 

3,663

 

Total assets

 

$

270,425

 

$

302,175

 

 

 

 

 

 

 

Liabilities and equity

 

 

 

 

 

Current liabilities:

 

 

 

 

 

Accounts payable

 

$

17,046

 

$

22,617

 

Accrued expenses and other liabilities

 

30,570

 

28,870

 

Deferred revenue

 

9,218

 

7,201

 

Income taxes payable

 

945

 

1,121

 

Deferred income taxes

 

3,100

 

3,149

 

Total current liabilities

 

60,879

 

62,958

 

Credit facility agreement

 

35,000

 

25,000

 

Deferred revenue, net of current portion

 

11,038

 

13,920

 

Other long-term liabilities, customer deposits and virtual print fee liability

 

4,458

 

2,691

 

 

 

 

 

 

 

Commitments and contingencies

 

 

 

 

 

 

 

 

 

 

 

Equity (deficit)

 

 

 

 

 

Common stock

 

325,540

 

309,894

 

Accumulated deficit

 

(165,824

)

(112,711

)

Total RealD Inc. stockholders’ equity

 

159,716

 

197,183

 

Noncontrolling interest

 

(666

)

423

 

Total equity

 

159,050

 

197,606

 

 

 

 

 

 

 

Total liabilities and equity

 

$

270,425

 

$

302,175

 

 



 

RealD Inc.

Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

 

 

 

Nine months ended

 

 

 

December 31,

 

December 23,

 

 

 

2012

 

2011

 

Cash flows from operating activities

 

 

 

 

 

Net income (loss)

 

$

(5,443

)

$

31,342

 

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

 

 

 

 

 

Depreciation and amortization

 

24,130

 

20,558

 

Deferred income tax

 

(49

)

(179

)

Non-cash interest expense

 

342

 

133

 

Non-cash stock compensation

 

13,965

 

11,718

 

Gain on sale of digital projectors

 

 

(1,156

)

Loss on disposal of property and equipment

 

44

 

434

 

Impairment of long-lived assets and related purchase commitments

 

6,581

 

9,024

 

Changes in operating assets and liabilities:

 

 

 

 

 

Accounts receivable

 

6,361

 

6,661

 

Inventories

 

26,465

 

8,951

 

Prepaid expenses and other current assets

 

(2,372

)

(306

)

Deferred costs - eyewear

 

581

 

(524

)

Other assets

 

(661

)

(3,458

)

Accounts payable

 

(5,595

)

(32,904

)

Accrued expenses and other liabilities

 

(2,092

)

(12,794

)

Other long-term liabilities, customer deposits and virtual print fee liability

 

1,767

 

1,700

 

Income taxes receivable/payable

 

(176

)

4,024

 

Deferred revenue

 

(865

)

(6,269

)

Net cash provided by operating activities

 

62,983

 

36,955

 

 

 

 

 

 

 

Cash flows from investing activities

 

 

 

 

 

Purchases of property and equipment

 

(11,665

)

(5,545

)

Purchases of cinema systems and related components

 

(12,774

)

(46,656

)

Proceeds from sale of digital projectors

 

2,474

 

3,999

 

Net cash used in investing activities

 

(21,965

)

(48,202

)

 

 

 

 

 

 

Cash flows from financing activities

 

 

 

 

 

Repayments of long-term debt

 

 

(2,311

)

Proceeds from credit facility

 

47,500

 

30,000

 

Repayments on credit facility

 

(37,500

)

(5,000

)

Payments of debt issuance costs

 

(1,167

)

 

Proceeds from exercise of stock options

 

1,070

 

528

 

Proceeds from employee stock purchase plan

 

611

 

 

Proceeds from exercise of warrants

 

 

271

 

Proceeds from exercise of motion picture exhibitor options

 

 

3

 

Purchases of treasury stock

 

(47,759

)

 

Distributions to noncontrolling interests

 

(1,000

)

 

Net cash (used) provided by financing activities

 

(38,245

)

23,491

 

Net increase in cash and cash equivalents

 

2,773

 

12,244

 

Cash and cash equivalents, beginning of period

 

24,894

 

16,936

 

Cash and cash equivalents, end of period

 

$

27,667

 

$

29,180

 

 



 

RealD Inc.

Schedule of Non-GAAP Reconciliations

(In thousands)

(Unaudited)

 

Reconciliation of Net Income (Loss) to Adjusted EBITDA

 

 

 

Three months ended

 

Nine months ended

 

 

 

December 31,

 

December 23,

 

December 31,

 

December 23,

 

(in thousands)

 

2012

 

2011

 

2012

 

2011

 

 

 

 

 

 

 

 

 

 

 

Net income (loss)

 

$

(4,159

)

$

2,763

 

$

(5,443

)

$

31,342

 

Add (deduct):

 

 

 

 

 

 

 

 

 

Interest expense, net

 

426

 

227

 

1,027

 

710

 

Income tax expense (benefit)

 

694

 

(2,241

)

4,242

 

7,170

 

Depreciation and amortization

 

8,194

 

7,406

 

24,130

 

20,558

 

Other (income) loss (1)

 

183

 

792

 

557

 

(157

)

Share-based compensation expense (2)

 

4,871

 

4,086

 

13,965

 

11,718

 

Impairment of assets and intangibles (3)

 

680

 

1,196

 

6,581

 

9,024

 

Sales and use tax (4)

 

1,008

 

1,569

 

3,170

 

5,076

 

Property tax (5)

 

580

 

367

 

1,191

 

1,133

 

Adjusted EBITDA

 

$

12,477

 

$

16,165

 

$

49,420

 

$

86,574

 

 


(1)         Includes gains and losses from foreign currency exchange and foreign currency forward contracts.

(2)         Represents share-based compensation expense of nonstatutory and incentive stock options and restricted stock units and employee stock purchase plan to employees, officers and directors.

(3)         Represents impairment of long-lived assets, such as fixed assets, theatrical equipment and related purchase commitments and identifiable intangibles.

(4)         Represents taxes incurred by us for cinema license and product revenue.

(5)         Represents property taxes on RealD Cinema Systems and digital projectors.

 

Reconciliation of Net Cash Provided by Operating Activities to Free Cash Flow

 

 

 

Nine months ended

 

 

 

December 31,

 

December 23,

 

(in thousands)

 

2012

 

2011

 

 

 

 

 

 

 

Net cash provided by operating activities

 

$

62,983

 

$

36,955

 

Purchases of property and equipment

 

(11,665

)

(5,545

)

Purchases of cinema systems and related components

 

(12,774

)

(46,656

)

Free cash flow

 

$

38,544

 

$

(15,246

)